Days before the latest unemployment rate for the U.S. rose to 4.3% and the stock market suffered, the Kansas City Federal Reserve Bank released its regional factory index at its lowest level in four years in July.
The Tenth Circuit Bank Survey includes Oklahoma and its showed the volume of shipments and employment levels decreased at a moderate pace. It also indicated that most firms expect to maintain or increase current levels in the next six months.
The decline in July manufacturing activity was primarily driven by durable manufacturing, particularly transportation equipment, fabricated metal, and machinery. All month-over-month indexes were negative and fell from last month, except the price indexes.
The volume of shipments, new orders, and backlogs all decreased substantially from last month, while production and employment fell at a moderate pace. The year-over-year composite index for factory activity ticked down from -9 to -13 as employment was flat but new orders fell sharply once again. Despite this, capital expenditures grew modestly and are expected to increase more in coming months. The future composite index ticked down from 7 to 5 in July, as firms continue to expect increases in production, new orders, and employment.
Those manufacturers surveyed by the Federal Reserve Bank had mixed responses. Thirty-one percent reported they had an increase in employee turnover in the past year and 45% reported no change in turnover. Another 24% said they had a decrease in the number of their employees.
Additionally, 79% of the firms that reported an increase in turnover said that it has primarily increased for production workers and 3% said it has primarily increased for managerial workers, while 18% said it has primarily increased for both production and managerial workers.
Here’s what the respondents had to say:
“Soft market demand is impacting labor hours. Normally very busy during the summer season, but this year average hours per week are approximately 36 – 40. Finding growth has been slower than normal.”
“We continue to see increased demand for our machining services. Some is definitely attributable to our ability to take work from our domestic competitors. Maintaining dedicated sales staff has been beneficial.”
“The past 2 years we have been using temporary employees, only way we could get enough people. With the demand for our products dropping, we have let most of the temps go and reduced our production to get back in line to where we need to be.”
“Business has picked up slightly. We are anxious to see what the second half of this year looks like.”
“Orders have slowed as we enter middle of summer. This will ramp back up in the fall. Steel prices are down, and we feel it is probably close to the bottom. We are ordering more to capture lower prices going forward in case they start going up.”
Others said:
“Customer demand has decreased significantly and last six months of year is very soft.”
“Record amount of work in process and orders on the books. On pace for record year in sales and profit.”
“Very difficult to get entry-level workers and maintenance workers.”
“Orders are down significantly from the prior year.”